Is It Time To Fade The Rally In US Steel Corp (X)

This was originally published on Andrew Nyquist’s SeeItMarket.com on December 25th

Shares of United States Steel Corp. (X) have collapsed 81% from the 2014 highs, but is it still too early to call for a bottom in the once great steel producer?

China’s mass production rate of steel has led to “dumping” in the United States and other areas of the world, which essentially means those foreign competitors are selling below or at production costs. Tack on a stronger U.S. Dollar and you have continued downward pressure on the likes of US Steel, Nucor (NUE), AK Steel (AKS), and more.

And this could keep their respective stock prices suppressed a bit longer.

Despite tariffs levied by the U.S. Commerce Department on December 23rd, the market reacted as if the anti-dumping tariffs were less … Read More »

Unusual Options Activity

ASML Holding (ASML)- 3,000 July $100 puts were bought for $1.25-$1.45. Put activity was 5x the average daily volume. Shares have recovered in the last week, but it is struggling to regain the 100-day SMA ahead of earnings tomorrow morning.
Bed Bath & Beyond (BBBY)- The 1×2 Nov $67.50/$60 ratio put spread was put on 3,350 times for a $1.60 debit. Whether it has been their quarterly results or their FY outlook as of late, BBBY has found a way to disappoint investors in recent reports. On June 25th, Telsey Advisory reiterated their underperform rating and a $65 price target.
Micron Technology (MU)- The 1×2 Jan 2016 $20/$25 ratio call spread was put on 6,500 times for a $0.92 debit. There were reports last night that Tsinghua Unigroup is offering $21 per share to acquire to the company.
United States Steel … Read More »

Unusual Options Activity

Gold Fields (GFI)- 3,000 Oct $4 puts were sold for $0.69. They reported a 10% decline in gold production in Q1, but the stock is trying to bottom at the March lows near $3.60.
Mylan (MYL)- The July $65/$80 bull risk reversal was put on 2,870 times for a $0 debit. Volume was below the open interest in both options. Mylan is still committed to acquiring Perrigo is a stock and cash deal, which is also an effort to avoid being taken over by a larger competitor. Teva Pharmaceutical offered MYL $82 per share value in a stock/cash deal to acquire them recently.
Workday (WDAY)- Roughly 2,750 Sep $105 calls were purchased for $3.10-$3.40 and 2,000 Sep $80 puts were sold for $4.00-$4.20. Nearly 5,000 WDAY Sep $105 calls have been bought and 6,000 Sep $80 puts have been sold … Read More »

Unusual Options Activity

Huntsman (HUN)- Another 1,500 Jan 2016 $22 calls were bought for $2.50-$2.55, against open interest of 10,601 contracts. This is the 3rd straight day of buying (open interest was just 571 contracts on March 27th). Earnings estimates have fallen, but shares currently trade at a P/E ratio under 10x (2015 estimates), price to sales ratio of 0.46x, and a price to book ratio of 3.01x.
Lumber Liquidators (LL)- The Apr 10 weekly $31/$36 bull call spread was put on another 3,000 times for a $2.20 debit. This trade was done yesterday as well.
Molson Coors (TAP)- 11,000+ May $77.50 calls were purchased for $2.40-$2.60. Just a few minutes later 16,000 Apr $77.50 calls were sold for $0.85-$1.00 (likely a roll from Apr calls into May calls). Call activity was 9x the average daily volume.
United States Steel (X)- 4,000 May 15 … Read More »

Options Report

(This Options Report is an example of what will be included in my ORM Equity/Option Trader Subscription Service for $9.99 per month)

Email me at Mitchell@OptionsRiskManagement.com or tweet me @MitchellKWarren on StockTwits/Twitter if you’d like for me to notify you when it is available or if you have any other questions.

Open Interest Updates From The Previous Trading Days Action

AECOM (ACM)- June $27.50 put open interest went from 3,632 to 8,398 contracts (more buying yesterday).
Air Products & Chemicals (APD)- Apr $140 put open interest went from 2,077 to 4,280 contracts (selling as part of a bull risk reversal yesterday).
Atmel (ATML)- Apr $9 call open interest went from 3,309 to 5,246 contracts (buying yesterday).
Bank of New York Mellon (BK)- Mar 20 $40 call open interest went from 17,027 to 18,663 contracts (more buying).
Anheuser Busch Inbev SA … Read More »

Unusual Options Activity

BERY- Someone sold their 3,000 Mar 2015 $30 calls for $2.60 each, against open interest of 3,356 contracts. He/she bought those calls on November 10th for $0.70. Berry Plastics is set to report earnings on January 29th and the stock is currently up for the eight consecutive week.
C- The two largest single trades of the day in Citigroup were a seller of 6,900 Feb 13 weekly $48.50 puts for $0.65-$0.66 and then 11 minutes later a seller of 10,000+ Mar 20 $47 puts for $0.83-$0.84. Volume was above the open interest in the Feb 13 weekly $48.50 puts. The recent performance in U.S. treasuries has sent the stock down about 8% in less than a week. These big put sales are willing to step in ahead of earnings on January 15th (stock has moved higher after earnings on … Read More »

The Sell-Off In U.S. Steel Is Overdone
My article on United States Steel (X) for Seeking Alpha

United States Steel (X) has had a major turnaround recently, beating EPS estimates on five straight earnings reports. The last three quarters the company has turned a profit after a stretch of four consecutive losses. Regardless of the strong results the stock has fallen 30% from the September 17th high of $46.55 and is now only up 10.94% year to date. Higher beta stocks such as U.S. Steel combined with the broader market weakness from the same time period is setting up for a buying opportunity in the $4.7B Pittsburgh-based steel producer…Click here to read the rest of my article on U.S. Steel.

Smart Money Report

TWTR- Twitter is set to announce Q1 earnings after the bell tonight. Analysts are looking for -$0.03 in EPS and revenue of $241 million. The options market is implying a $5.65 move, or 13.42%, in either direction through Friday’s close. Call to put ratio in (TWTR) options is currently 1.40, led by activity in the May 17 $50 and $52.50 calls. The stock dropped 24.16% the day after releasing it’s first earnings report back on 2/5.
X- Another notable earnings release due out tonight will come from U.S. Steel. Analysts are looking for $0.32 in EPS and revenue of $4.5 billion. Option traders are pricing in a $1.22 move, or 4.64%, in either direction through Friday’s close. The call to put ratio in (X) options is currently … Read More »

Smart Money Report

BAC- 17,500 May 2014 $16 puts were sold for $1.11 each, against open interest of 5,414 contracts.
NBG- Over 20k Jan. 2014 $6 calls were bought for $0.09-$0.10 each,  against open interest of 122,327 contracts.
VIX- 5,000 Jan. 2014 $15 calls were purchased for $0.55 each, against open interest of 168,636 contracts. Nearly $4M worth of call premium has been bought so far today.
X- 10,750 Feb. 2014 $30 puts were bought for $1.75 each, against open interest of 150 contracts.
TWTR- Twitter shares are now down 19% from last week’s high of $74.73. The call to put ratio in (TWTR) options is currently 1.08, led by activity in the Jan. 3 weekly $60 calls.

Free Trial: If you would like to know more about premium content or you would like a free trial of our service, email me at Mitchell@OptionsRiskManagement.com .

Premium Subscription: … Read More »

Smart Money Report

IAG- IAMGOLD will report Q2 earnings after the bell tonight. Analysts are looking for $0.09 in EPS and revenue of $324 million. The options market is implying a $0.55 move, or 10.24%, in either direction. Call to put ratio in the Aug. options is currently 3.06.
SINA- Another earnings release to watch will come from SINA. Analysts are looking for $0.12 in EPS and revenue of $143 million. Options traders are pricing in a $7.60 move, or 9.52%, in either direction. The call to put ratio in the Aug. options is in favor of the bulls at 3.29.
NOK- Open interest in the Jan. 2014 $4.50 calls went from 35,614 contracts to 53,405 contracts today, following the large buyer on Friday. Nokia shares are trading right at the $4.20-$4.30 resistance level.
X- There has been steady large upside call buying the … Read More »